If you’re the CFO of a mid-size or larger company, you probably end up needing to delegate most of your company’s budgeting and financial analysis to your staff. And it’s likely that, since they’ve got their own daily tasks to attend to, they don’t have a huge amount of time to devote to these important functions either.
The result of the business budgeting process, which for many companies is fairly unwieldy anyway, tends to get pushed to the bottom of the pile. This is especially true for companies still using an annual budget.
In fact, according to an April article from Accounting Today, only 37 percent of CFOs think their annual budgeting process is valuable. And of those, all of them think the process needs to be improved.
But how can CFOs find the time to implement changes to their company’s budgeting, and what changes should they be making?
Reposition the budget as a priority for you and your management team.
The first and most important step to making any change is to change your mind – and that’s true whether you’re trying to lose weight or working on your business processes.
So if you’re unhappy with how your budget process works, decide that you’re going to change things. Then convey this message to your management team, and get their buy-in. If you’re going to make budgeting a priority again, you want your best people tackling the job.
Decide whether the annual budget is actually working for you.
There’s no rule that says you have to make an annual budget. Take the time to analyze your annual budget process, and decide whether or not it’s actually providing you with real value.
If it’s not, consider switching to a rolling forecasting system. When we built our budgeting software tool, True Sky, we made sure that it could function using this ongoing budget process, which is quickly overtaking the annual budget among businesses, as well as the more traditional, annual process.
The reason? Rolling forecasting is:
- More actionable
- More doable
- Provides businesses with more accurate data than a once-a-year budget
Often, the numbers you came up with last year will be out-of-date by March – maybe even sooner.
Instead, adopting a rolling forecasting model allows you to come up with more realistic numbers, as you’re adjusting them on an ongoing basis based on the real cost and income you’re seeing month-to-month.
This method also allows you to quickly respond to and adjust for changing market conditions or other unforeseen changes throughout the year.
Invest in the right technology.
Just like you wouldn’t expect your team to perform well on 1990s-era computers, you shouldn’t ask your team to switch to a rolling forecast system without investing in the right software. Forecasting using only spreadsheets is cumbersome and slow, and won’t get the new system off to a good start.
Instead, consider using a budgeting tool like True Sky. We created True Sky using our years of budgeting expertise, and designed it to be easy to use and intuitive. It actually uses the same Excel interface that most workers today are used to.
True Sky also allows you to more easily access the data you need to make smarter decisions. You can pull almost any report you could possibly need:
- Sales reports
- Cash flow statements
- Balance sheets, and more – when you need it
You can also set up permissions that allow your team members to do the same.
Be your team’s biggest cheerleader.
Pompoms aren’t required, but you do need to show your team that you’re just as willing to put in the work of improving your budget process as you expect them to be. Engage your employees’ feedback when coming up with your plan, and address any concerns that arise thoughtfully.
Asking people to change the way they do things is a tough sell, so you’ll have to really step into your leadership role and lead the charge. If your team has a bit of a morale problem, you may need to get creative – you can find some tips to make your employees feel appreciated during the holidays and year-round on the blog of our partner, TGO Consulting.
If we can help you improve your budgeting process, contact us!